Vermont Could Collect Taxes in Crypto Under Proposed Law

A state legislator in Vermont has proposed a bill (S-0269) to create a new regulatory framework for the use of blockchain technology.

Sen. Alison Clarkson introduced the bill on Jan. 3, public records show, and the measure has since been forwarded to the Committee on Economic Development, Housing and General Affairs.

In addition to mandating several reports on cryptocurrencies and blockchain, it notably outlines how the state could classify certain firms as "digital currency limited liability companies," particularly those that operate their own networks.

Those companies would, if the bill is approved, be required to pay "in the form of its digital currency a transaction tax equivalent to $0.01" whenever a new unit of cryptocurrency is created, traded or transferred.

"A digital currency limited liability company is exempt from taxes otherwise applicable," reads the bill, which states in its opening:

"This bill proposes to implement strategies relating to blockchain, cryptocurrency, and financial technology in order to: promote regulatory efficiency; enable business organizational and governance structures that may expand opportunities in financial technology; and promote education and adoption of financial technology in the public and private sectors."

It also outlines protections for how firms govern the protocols that underly a particular cryptocurrency. Those companies "may adopt any reasonable algorithmic means for accomplishing the consensus process" and, in line with the provision, "provide for the modification of the consensus process or the substitution of a new process that complies with the requirements of the law."

The submission is perhaps unsurprising, given the past interest that has been shown by lawmakers in the state. The legislature approved a blockchain study in June, seeking to assess how the state's job market may be affected. In 2016, lawmakers finalized a law that made blockchain data admissible as evidence in court.

Clarkson's new bill also calls for a "Fintech Summit," which would bring together state and industry stakeholders to discuss how Vermont can promote the tech's wider use. The state would devote $25,000 to help fund the event, under the auspices of the Agency of Commerce and Community Development.